TPG Raising $2bn for a "bridge fund"
http://www.reuters.com/article/2014/01/30/us-tpg-bridgefund-idUSBREA0T01L20140130
TPG asked the Oregon Investment Council for a $700 million commitment to the bridge fund, which was approved. Dubbed the TPG Strategic Partnership Interim Fund, the bridge fund will be rolled into the next flagship fund that TPG is planning to raise, TPG Partners VII."Fund VII is 'make or break' for these guys," Oregon State Treasurer Ted Wheeler told the meeting.
Coulter said he expected that TPG would raise around $10 billion for TPG Partners VII. The bridge fund would let the firm delay fundraising for TPG Partners VII for six months and keep its focus, he added.
Can someone explain why they would raise a bridge fund instead of just start fundraising for VII now?
I'm speculating here, but my guess is these guys have very little dry powder for PE investments left since their last fund was almost six years ago. However, they also haven't exited/returned enough for LPs to give them another $10bn. Raising a $10bn fund is difficult and takes a long time. (KKR had to extend the fundraising period for their $8bn NA fund, Providence fell $1bn short of their target, etc.) Much easier to raise $2bn now and roll it over
This is all completely accurate.
Another, lesser reason is that it's a relationship-oriented move with some of their largest and longest-tenured LPs.
The rationale is that their '06 fund returns were not great, and their '08 returns are bottom quartile so far as well. However, they're running out of dry powder in the '08 fund. This "bridge fund" gives them more time to improve returns in '08 and monetize investments, while also providing them capital to keep investing in the interim.
The OIC summary on this is public fwiw: http://www.oregon.gov/treasury/Divisions/Investment/Audio/OIC%20Public%20Meeting%20Materials.pdf Starts on pg 14
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